‘A Helsinki Guggenheim,” says Petra Havu of the Association of Finnish Artists, “is not a project for taxpayers’ money.”

“It represents a supreme lack of imagination,” adds Jörn Donner, the veteran Finnish politician, actor, director and producer who won Finland’s only Oscar for his work with Ingmar Bergman on Fanny and Alexander. “It is part of an insecure, provincial view of the world.”

As you might gather, the announcement made in Venice at the beginning of this month of an international competition for the design of a new Guggenheim museum for the Finnish capital is already raising hackles in Helsinki.

What adds fuel to such critics’ fire is that Helsinki has been here before all too recently, expensively and for no gain. In early 2011, the city’s mayor, Jussi Pajunen, committed £1.6 million of public funds to a feasibility study for a Guggenheim Museum on Helsinki’s South Harbour, a site overlooked by some of Europe’s finest neoclassical, National Romantic and Modern architecture.

“It was quite astonishing,” says Havu. “The Finnish taxpayer was subsidising the Guggenheim Foundation in New York so they could sell us a… Guggenheim.”

“Incredible,” says Tiina Erkintalo, executive director of Checkpoint Helsinki, a new commissioning body for contemporary art. “Not only would we use public money at a time of economic hardship and cuts in arts spending to finance the Americans, but we would then have to pay the Guggenheim a substantial annual sum each year to lease their ‘brand’.”

For the Finns, this was rather like writing a large cheque to Pepsi to set up a soft-drink plant in Helsinki. Even worse, the slavish attitude towards the Solomon R Guggenheim Foundation by the, mostly, conservative Finnish politicians in search of what they like to call “world-class brands” felt like a kick in the face for a city and a country that has, despite a very small population, performed with real character and influence on the international stage.

“We want to develop a museum of the future,” said Richard Armstrong, director of the Guggenheim Foundation, at the time the project was launched. “Being on the cutting edge would, of course, benefit both Helsinki and the Guggenheim network.” In earlier years, and while the first Finnish Guggenheim was on the drawing board, Helsinki had exported design to the United States, notably in the stunning architecture of Eero Saarinen, including the legendary TWA terminal at New York’s JFK airport. The tables have clearly been turned.

“Of course, if the capitalists want to come and spend their money on baubles,” Donner laughs, “they’re very welcome. But, Finland doesn’t have the money to cushion the Americans.” And, as Havu says, “We’re not against the Guggenheim as such – the Foundation has an interesting history – but there has been no wide discussion of this project, beyond talk of it boosting tourism.”

Here is clear evidence of a profound clash of cultures between politicians and the art world. For Mayor Pajunen and the “world-class global brands” tendency, many of whom have been educated or spent significant time working in the United States, culture is an industry with commercial power to help revive flagging economies. And, just as today the restaurant in Eliel Saarinen’s magnificent Helsinki central railway station is now a branch of Burger King, and Starbucks has opened inside Alvar Aalto’s otherwise peerless Academic Bookshop, so a thumping-great all-singing, all-dancing and undoubtedly “iconic” branch of the Guggenheim has been on the cards for the past three years.

Guggenheim’s Plan A for Helsinki [embedded below] was scuppered by the city government, by just one vote, two years ago. The big-buck plan, rejected on grounds of cost, had been for a €140 million, 129,000 sq ft Gugg scrambling up from the South Harbour under the serene dome of Carl Ludwig Engel’s neoclassical Lutheran cathedral. The Foundation’s report claimed that 550,000 visitors a year would pile through the portals of this, its latest overseas outpost, hungry for the kind of “blockbuster shows” that, until now, had been the preserve of Paris, London or New York itself.

While Helsinki is an exceptionally beautiful city with a distinct sense of identity and place, its subtle appeal might well not be to the tastes of the many millions of people who use the city’s international airport as a transit stop between, for example, the United States, China and the Far East. It is these people Mayor Pajunen hopes to attract to the city centre. If only they can be lured to spend a couple of nights and a lot of money in downtown hotels, restaurants and shops, what a boost this would be to the local economy.

This is, in fact, why city streets have been given over recently to garish shops flaunting “luxury global brands”, along with American burger and coffee chains. And, so the thinking goes, if only if the city gives in to Plan B – a second shot at the American museum, this time sited on a lorry park, away from the city’s key historic streets, squares and monuments – Helsinki might become as rich as old Solomon R Guggenheim himself.

While the Guggenheim project is very much a part of a drive to increase tourism, it does have supporters in the Finnish art world. Kaj Forsblom owns and runs the country’s largest private art gallery, Galerie Forsblom, in the imposing former offices of the Suomi Mutual Life Assurance Company. Significantly, the gallery’s beautiful new interiors are by the New York architects Gluckman Mayner, designers of the fashionable Gagosian galleries in Manhattan’s West 21st and West 24th Streets.

“It’s true that the Guggenheim’s first plan for Helsinki was wrong, ridiculous even,” says Forsblom. “It would have meant shutting down the City Art Museum, so, of course, local artists were up in arms. But that’s history. When we get a good design from the competition, I think opinions will soften. We have excellent museums and galleries in Helsinki, but we don’t have a major gallery devoted to modern art. There’s the Ateneum, which covers historic art, and Kiasma [designed by the New York architect Steven Holl] concerned with contemporary and mostly Nordic art. What the Guggenheim would do, aside from bringing its collections to Helsinki, is to open up the Finnish art world, and to reinforce the close connections we have with, for example, Stockholm on one side and St Petersburg on the other. The potential for art tourism, if you want to call it that, is great.”

Forsblom also feels, as do many politicians, that it would be a “major embarrassment” for Finland if the Guggenheim failed in Helsinki. This would only show that Finland is unprepared to join the league of modern “global” nations. He also cites the fact that the Ateneum – Finland’s national gallery, dating from 1887 – was opened only after fierce debate between embedded factions in the worlds of fine and applied arts, while its cost seemed all but impossible for such a small country. Initially dubbed the “Palace of a Million Marks”, it was to become the anchor of Finnish art for many decades.

And, here, I can’t help feeling, lies the problem with the Helsinki Guggenheim project. Finns are rightly proud of the role art has played in establishing their country as distinct and special. To see Helsinki become a kind of dumping ground for “global brands” subject to the fickle favours of stopover international tourism and, now, on modest means, to fund an American art foundation with an unsure record of success overseas is, indeed, somewhat bizarre.

“It’s absurd in any case,” says Erkintalo. “The whole concept of new museums, galleries and contemporary art has moved on since the excitement over the Guggenheim Bilbao. Such a big museum could also be a trap. They will have to keep filling it with big new exhibitions. There will be big running costs. Finnish taxpayers’ money would be better spent on investing in new art and artists, collaborating here and around the world. And we already have enough big buildings to achieve this…”

“But,” says Javier Pes of The Art Newspaper, “Helsinki’s mayor is not the only one to be seduced by Bilbao and the Guggenheim. Yes, art has moved on and the Guggenheim itself knows future outposts must be more collaborative efforts with local artists, curators and culture, but the appeal of the big, arriviste ‘folly’ – which may or may not work – continues to work its charm, and the Guggenheim isn’t the only contender. The Pompidou and the Hermitage are doing much the same thing. London hardly needs a Guggenheim, either, and yet Boris Johnson has been talking of one for the Olympics site at Stratford.”

In a year or so we will be able to look at the designs for the Guggenheim’s second attempt on the shores of Helsinki. Folly or the future? An uncertain Finland, torn between rye bread and burger buns, an innate national modesty and brash global “branding”, must decide.